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Recommendation 26: Convert the Civilian Acquisition Workforce Personnel 

Demonstration Project (AcqDemo) from an indefinite demonstration project to 

a permanent personnel system.

Problem

Since February 1999, Congress, OPM, and DoD have strived to improve acquisition outcomes by 

providing DoD with greater control over personnel processes and functions that enable DoD to attract 

and retain employees who contribute most to successful organizational mission outcomes. The DoD 

Civilian Acquisition Workforce Personnel Demonstration Project (AcqDemo) is a congressionally 

mandated endeavor DoD developed and implemented to achieve that end. AcqDemo administrators 

and DoD leadership have used the demonstration project’s personnel flexibilities to improve the DoD 

AWF and reward high-contributing AcqDemo participants. The AcqDemo Program Manager has 

requested permanency each fiscal year since 2016. Although the FY 2018 request for permanency 

resulted in major program revisions, including transfer of management authority from OPM to the 

Secretary of Defense, AcqDemo remains a temporary authority. AcqDemo is exceeding its goals and 

should become the permanent, sole personnel system for the DoD acquisition workforce.

Background

In Section 4308 of the FY 1996 NDAA, as amended by Section 845 of the FY 1998 NDAA, Congress 

permitted DoD, with the approval of OPM, to conduct a personnel demonstration project within DoD’s 

civilian AWF and supporting personnel assigned to work directly with that workforce.

1 The purpose 

was to enhance DoD’s acquisition mission by “allowing greater managerial control over personnel 

processes and functions and, at the same time, expand the opportunities available to employees 

through a more responsive and flexible personnel system.”2 On February 7, 1999, DoD implemented 

AcqDemo, a contribution-based, broadband compensation and personnel system.3 Congress limited the 

covered workforce to 95,000 participants.4

When initially implemented, the AcqDemo project evaluation plan addressed how DoD would 

evaluate the project for the first 5 years and allowed for major changes and modifications through 

announcements in the Federal Register. At the 5-year point, Congress and DoD, with OPM approval,

were to reexamine AcqDemo for “(a) permanent implementation; (b) modification and additional 

testing; (c) extension of the test period; or (d) termination.”5 Since then, Congress has extended 

AcqDemo and increased the covered workforce size several times, except for an interruption from 2007 

 

1 OPM: Civilian Acquisition Workforce Personnel Demonstration Project; DoD; Notice, 64 Fed. Reg. 1426-1492 (Jan. 8, 1999). 

Note: A version of this notice that includes several amendments can be accessed at 

https://www.acq.osd.mil/dpap/ops/docs/ACQDEMO%20FedReg%20WAdmts.pdf. 2 DoD, DoD Civilian Acquisition Workforce Personnel Demonstration Project (AcqDemo) Operating Guide Version 2.2, ii, accessed March 8, 

2018, http://acqdemo.hci.mil/docs/Operating%20Guide.pdf. 3 A contribution-based system links pay and awards to mission contribution and value of a position. Broadbanding allows for more 

competitive hiring and compensation by using a larger pay range (band) than the GS system allows. 4 “Frequently Asked Questions,” DoD Civilian Acquisition Workforce Personnel Demonstration Project, accessed March 8, 2018, 

http://acqdemo.hci.mil/faq.html. 5 OPM: Civilian Acquisition Workforce Personnel Demonstration Project; DoD; Notice, 64 Fed. Reg. 1426-1492 (Jan. 8, 1999). 

Note: A version of this notice that includes several amendments can be accessed at 

https://www.acq.osd.mil/dpap/ops/docs/ACQDEMO%20FedReg%20WAdmts.pdf.
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through 2010 when Congress directed DoD to implement the now defunct National Security Personnel 

System (NSPS).6

Congress has extended the temporary authority through December 31, 2023, and increased the number 

of covered AWF members to 130,000, and through Section 867 of the FY 2017 NDAA, enhanced 

AcqDemo by transferring management authority from OPM to the Secretary of Defense. Eliminating

OPM oversight reduced bureaucracy and empowered DoD to execute demonstration project 

flexibilities more efficiently and effectively.7 In Section 841 of the Senate Armed Services Committee’s 

recommendations for the FY 2019 NDAA, the committee recommends making AcqDemo permanent. 

The panel concurs with this opinion.

Discussion

In researching AcqDemo, the Section 809 Panel interviewed DoD AWF acquisition executives and 

members, acquisition career managers, human resources subject matter experts, AcqDemo Program 

Management Office personnel, and various labor union representatives. The panel also reviewed the 

November 9, 2017 Federal Register Notice (FRN) description of AcqDemo, the AcqDemo operating 

guide, AcqDemo annual evaluations, and the literature posted on the AcqDemo library.8

Demonstration Project Characteristics

Participation in AcqDemo is voluntary for eligible organizations and teams.9 When the demonstration 

project began in February 1999, the participating workforce population consisted of 4,700 participants, 

but as of February 2018, that population has grown to more than 39,000 participants.

10

Figure 2-1. AcqDemo Participation from 1999 to 2018

 

6 NSPS was also a broadband system. AcqDemo differs in its design and management flexibilities and it garners union support as it 

requires local union bargaining agreements. 7 Demonstration project relating to certain acquisition personnel management policies and procedures, 10 U.S.C. § 1762. 8 The AcqDemo Program Office staff is required to publish its project plan and any modifications in the Federal Register. The staff 

responds to public comments in Federal Register Notices (FRNs) and the most current FRN serves as the AcqDemo regulatory framework. 9 At least one-third of an AcqDemo participating organization must be AWF members and at least two-thirds of the organization must be 

AWF members and supporting personnel assigned to work directly with the AWF.

10 DoD, DoD Civilian Acquisition Workforce Personnel Demonstration Project (AcqDemo) Operating Guide Version 2.2, ii, accessed 

March 8, 2018, http://acqdemo.hci.mil/docs/Operating%20Guide.pdf.

4,700 5,083 5,334 5,568

7,875

9,767 10,792 11,392

3,357 2,249 2,478 3,061

15,207 15,815 15,914 15,798 16,097

33,639

37,856 37,705

5,000

10,000

15,000

20,000

25,000

30,000

35,000

40,000

1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Population

Fiscal Year
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The current population distribution across DoD is shown in Figure 2-2:

Figure 2-2. Distribution of Acquisition Workforce Across DoD Components11

The two most popular characteristics of AcqDemo that differentiate it from the General Schedule (GS) 

classification and pay personnel system under which the majority of federal civilian employees work 

are its use of broadbanding to classify employees and its use of a contribution-based compensation and 

appraisal process.12 Broadbanding gives supervisors pay-setting flexibility for new personnel, which 

helps to make the DoD AWF more agile and improves its ability to compete for talent and meet 

changing mission requirements.13 Generally, organizations pay their AcqDemo employees higher 

salaries than they pay their GS counterparts when they are hired, but over time their salaries even out.14

The contribution-based compensation and appraisal process links employees’ pay and awards to their 

contribution to mission outcomes rather than longevity, meaning within participating organizations, 

high-contributing AcqDemo employees increase their compensation at a faster rate than they would if 

they were in the GS system.15 In short, higher contributors have the ability to earn more, faster.

16

Employees who are considered high contributors in terms of organizational outcomes are retained at 

greater rates than employees considered low contributors.17 Although there is not a statistically 

significant difference in retention rates, employee retention is slightly higher for AcqDemo participants 

than it is for GS employees in AcqDemo eligible organizations (ADEOs). Table 2-2 shows retention 

rates for employees hired on September 30, 2011.

 

11 “Workforce Demographics,” DoD Civilian Acquisition Workforce Personnel Demonstration Project, accessed March 8, 2018,

http://acqdemo.hci.mil/demographics.html. 12 DoD, DoD Civilian Acquisition Workforce Personnel Demonstration Project (AcqDemo) Operating Guide Version 2.2, 3-4, accessed 

March 8, 2018, http://acqdemo.hci.mil/docs/Operating%20Guide.pdf. 13 RAND National Defense Research Institute, 2016 Assessment of the Civilian Acquisition Workforce Personnel Demonstration Project, xxi, 

accessed May 7, 2018, http://acqdemo.hci.mil/docs/AcqDemo_Independent_Assessment_FY16.pdf. 14 Ibid, 73. 15 Ibid, 17. 16 Ibid, 83. 17 Ibid, x.
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Table 2-2. AcqDemo Participant Retention Rate, 2011-201518

Months Since September 30, 2011 AcqDemo Participants GS Employees in ADEOs

12 94.4 93.9

24 89.3 88.5

36 83.5 82.7

48 78.4 77.5

The AcqDemo Program Management Office staff recognizes the necessity to improve DoD’s ability to 

compete with the private sector for talent. In November 2017, the AcqDemo Program Management 

Office staff incorporated into the demonstration project five external hiring authorities: Direct Hire 

Appointments for the Business and Technical Management Professional Career Path, Veteran Direct 

Hire Appointments for the Business and Technical Management Professional and Technical 

Management Career Paths, Acquisition Student Intern Appointments, Scholastic Achievement 

Appointment, and Expedited Hiring.

19

Other key AcqDemo characteristics developed to help participating organizations meet their mission 

needs include the following:20

§ Mandated regular supervisor–employee interactions throughout the annual appraisal cycle.

§ Opportunities for greater professional development.

§ Career growth and development through use of sabbaticals.

§ A voluntary emeritus program that allows separated or retired civilians and former military 

members an opportunity to keep working after retirement or a buyout.

AcqDemo Participant Views

Senior Leaders

Senior leaders interviewed by the Section 809 Panel expressed interest in increasing participation in the 

demonstration project because of the flexibilities it allows, and they indicated high performers want to 

be in AcqDemo. For example, one interviewee told the panel, “If we can move contracting positions 

into AcqDemo that could help significantly with retention.” Senior leaders also applauded improved 

communication between supervisors and their employees regarding expectations and performance. 

Under AcqDemo, supervisors are able to set clear contribution goals at the beginning of a rating period 

and offer meaningful feedback at the end. AcqDemo employees believe these communications result in 

 

18 Ibid, Table 5.1, 55. 19 DoD, DoD Civilian Acquisition Workforce Personnel Demonstration Project (AcqDemo) Operating Guide Version 2.2, v, accessed 

March 8, 2018, http://acqdemo.hci.mil/docs/Operating%20Guide.pdf. 20 Ibid.
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improved trust and confidence in appraisals.21 One DoD senior leader told the panel, “The strength of 

AcqDemo is that it forces regular conversations [between supervisors and employees] where 

previously conversations were not being had. It puts the ‘so what’ question back into the 

conversation.” A third person praised AcqDemo for its ability to refocus the AWF on mission 

performance and support warfighters while rewarding strong employees for their performance in a 

manner other than promotion.

22

DoD senior leaders also endorse making AcqDemo permanent, and they believe that if the project 

became permanent, more ADEOs would join. One interviewee explained that due to the disruption 

caused by moving in and out of NSPS, some ADEOs have resisted joining due to the temporary nature 

of the authority; however, these ADEOS are ready to join AcqDemo should it become permanent. 

Another interviewee told the panel, “because AcqDemo was not permanent, some employees were 

sitting back and waiting to see what happens.”23

Labor Unions

Most of AcqDemo criticisms stem from labor unions, which are mistrustful of alternative personnel 

management systems. Labor unions prefer longevity-based systems like the GS system because 

longevity is a transparent, quantifiable metric, not subject to supervisor bias. The labor unions’ major 

objection is that AcqDemo is heavily subjective. Union complaints of this nature led to the upending of 

NSPS. Despite this overarching perspective, labor union representatives told the panel they generally 

are neutral with regard to AcqDemo. One local union president told the panel he believed individual 

members’ views vary based on their experience. “AcqDemo is popular when organizations are well 

funded and when employees feel they can trust management.” When managers in participating 

organizations are transparent about how they assess their employees and make data available to 

employees for review, the system works better than the GS system.24 Another union leader, who 

represents employees in three participating organizations, told the panel, “It is 10 times better than the 

GS system,” and “even where things are bad, it is five times better than GS.” A third representative told 

the panel, “During the recent furlough, union members in AcqDemo were better off than those in the 

GS system.”25

The facts support these assertions. AcqDemo administrators encourage union participation and 

unionized AcqDemo participants are achieving successful outcomes. They are generally paid higher 

salaries, are more likely to be promoted, and are retained at a higher rate than those in the GS system.26

 

21 RAND National Defense Research Institute, 2016 Assessment of the Civilian Acquisition Workforce Personnel Demonstration Project, xxi, 

accessed May 7, 2018, http://acqdemo.hci.mil/docs/AcqDemo_Independent_Assessment_FY16.pdf. 22 DoD senior leader interviews, conducted by Section 809 Panel, from October 2017 to March 2018. 23 Ibid. 24 Labor union representative and AcqDemo Program Office staff interviews, conducted by Section 809 Panel, from March to April 2018. 25 Ibid.

26 RAND National Defense Research Institute, 2016 Assessment of the Civilian Acquisition Workforce Personnel Demonstration Project, 71, 

accessed May 7, 2018, http://acqdemo.hci.mil/docs/AcqDemo_Independent_Assessment_FY16.pdf.
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Union leaders told the Section 809 Panel they like having the ability to choose between the two 

personnel systems; however, when their members trust management, and are compensated 

appropriately based on their contributions, they prefer AcqDemo.

27

AcqDemo works best when management makes pay pool data available to employees, so unions can 

verify that management rates its employees fairly and that all employees have an equal opportunity to 

be assigned special projects and meaningful work that will allow them to excel. This process instills 

confidence that management is not reserving plum assignments for supervisors’ favorite employees. 

AcqDemo also works well when management is willing to talk to union representatives about their 

issues. The union representatives that talked to the Section 809 Panel explained they have been able to 

resolve their issues when given the opportunity.28

Supervisors and Nonsupervisor Employees

Twenty-three percent of AcqDemo participants are supervisors. Supervisors’ starting salaries were

better, and their salaries rose faster in AcqDemo than in the GS system.29 AcqDemo participating

organizations have the option of paying cash differentials to incentivize and compensate supervisors 

and team leaders.30 Accordingly, supervisors’ perceptions of the project are generally positive, and the 

retention rates for supervisor participants in AcqDemo are high.31 Among nonsupervisory employees, 

there is a perceived lack of transparency regarding how employee ratings are calculated and translated 

to pay, how the pay pool process works, how management shares pay pool results, and the use of 

control points.

32 This skepticism, coupled with the perception that supervisors fare better under 

AcqDemo than nonsupervisory employees, may result in a lack of confidence that could undermine 

AcqDemo goals. Some employees may believe management does not fairly link compensation to 

employee contributions; however, data does not support this perception.33 An FY 2016 independent 

analysis of AcqDemo states, “we empirically assessed the relationship between contribution to 

organizational mission, as measured by [the difference between actual and expected employee overall 

contribution score], and the various career outcomes.”34 The independent analysis also indicates 

AcqDemo leadership may be able to combat this misperception through improved communication 

strategies.35 In that vein, the AcqDemo Program Management Office has sought to improve 

transparency and dispel any misperception regarding biases and fairness by publishing and 

disseminating its business rules, providing training to new and existing AcqDemo participants, 

 

27 Labor union representative and AcqDemo Program Office staff interviews, conducted by Section 809 Panel, from March to April 2018. 28 Ibid.

29 RAND National Defense Research Institute, 2016 Assessment of the Civilian Acquisition Workforce Personnel Demonstration Project, 75, 

accessed May 7, 2018, http://acqdemo.hci.mil/docs/AcqDemo_Independent_Assessment_FY16.pdf. 30 Ibid, 167. 31 Ibid, 75. 32 “Control points are defined as compensation limits within a broadband level based on an organization’s position management 

structure and assessment of the difficulty, scope, and value of positions developed to ensure equity and consistency within the 

organization. Compensation limits may be stated as a monetary value, internal pay range within the broadband level, or an overall 

contribution score and published in local business rules.” DoD, DoD Civilian Acquisition Workforce Personnel Demonstration Project 

(AcqDemo) Operating Guide Version 2.2, v, accessed March 8, 2018, http://acqdemo.hci.mil/docs/Operating%20Guide.pdf. 33 RAND National Defense Research Institute, 2016 Assessment of the Civilian Acquisition Workforce Personnel Demonstration Project, 

117, accessed May 7, 2018, http://acqdemo.hci.mil/docs/AcqDemo_Independent_Assessment_FY16.pdf. 34 Ibid, 85. 35 Ibid, 117.
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requiring supervisors meet with employees regularly, requiring employee self-assessments, and 

creating a formal grievance process for employees.36 The program management office staff also holds 

town hall meetings and maintains a website that provides program guidance, metrics, training, 

answers to frequently asked questions, and other programmatic information. AcqDemo proponents 

told the Section 809 Panel they designed the pay pool forum so that pay pool participants will hold one 

another accountable in ensuring equitable distribution of the pay pool.

Another characteristic of the project that has proven to be a challenge involves time. The timeconsuming AcqDemo implementation process of writing appraisals, participating in feedback sessions, 

and administering pay pools might discourage both supervisors and employees from fully engaging in 

the system.37 AcqDemo program management sought improvement in this area by modifying the 

project to reduce the six classification and appraisal factors to three factors, thus reducing the time for 

employee self-assessments, supervisor assessments, and pay pool administration.38

Conclusions

AcqDemo has performed well since its implementation nearly 20 years ago. It has proven more flexible 

than the GS pay system, and retention is higher among high-contributing employees than among lowcontributors. The managerial control that AcqDemo allows has improved DoD’s ability to compete for 

talent, retain the most highly qualified AWF employees, and motivate those employees to maximize 

their contributions to the DoD mission. The AcqDemo Program Office has modified it program plan 

over time to improve the project. Even union leaders, who generally oppose implementation of 

alternative personnel management systems, believe AcqDemo works as long as employees can trust 

management.

Convert AcqDemo from an Indefinite Project to a Permanent Personnel System

Both SASC and DoD acquisition senior leaders unanimously agree the ability to control its own 

personnel processes and functions has yielded successful mission outcomes, and they endorse making 

AcqDemo permanent. Successful outcomes and increasing participant satisfaction throughout the 

lifespan of the temporary authority is sufficient evidence AcqDemo is a proven personnel system. 

Permanency would allow DoD to continue its efforts without the limitations that may serve as a 

deterrent for eligible participating organizations. As such, the panel recommends converting AcqDemo 

to a permanent acquisition personnel system and retaining the authorities applicable to the 

demonstration project as described below, along with other improvements.

Make AcqDemo the Sole Personnel System for the DoD Acquisition Workforce

As the project has evolved, the AcqDemo program office staff has worked to improve perceived

shortcomings by improving transparency, offering training, reducing administration time, and 

incorporating processes to simplify the hiring process. Senior leaders, union representatives, 

supervisors, and employees agree AcqDemo works better for them than the GS system when 

 

36 Ibid, xxi-xxv. 37 Ibid. 38 OPM: Civilian Acquisition Workforce Personnel Demonstration Project; DoD; Notice, 64 Fed. Reg. 1426-1492 (Jan. 8, 1999). 

Note: A version of this notice that includes several amendments can be accessed at 

https://www.acq.osd.mil/dpap/ops/docs/ACQDEMO%20FedReg%20WAdmts.pdf.
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participating organizations are transparent and work with local union representatives. Participating 

organizations would improve their ability to manage their staffs if they focused their attention on 

managing AcqDemo properly, rather than dividing their attention between the management of two or 

more different systems. AcqDemo participation should be mandatory for all members of the DoD AWF

and nonacquisition supporting personnel if their rating chain is within the organizations using the new 

AWF personnel system. All members of the DoD AWF should be enrolled in the new DoD acquisition 

personnel system. For the purposes of this system, acquisition workforce means one of the following:

§ Employees in positions designated under 10 U.S.C. § 1721 

§ Other DoD employees designated as members of the acquisition workforce by

- The USD(Acquisition and Sustainment) for employees not assigned to a Military Service

- The senior acquisition executive of a Military Service for employees assigned to them.

Expand AcqDemo Coverage by Eliminating the Limitation on the Number of AcqDemo Participants

As evidenced by a rise of the AcqDemo population from 16,000 to 39,007 when Congress extended the 

demonstration project in the FY 2016 NDAA, AcqDemo participation has increase as the program’s 

longevity has increased. ADEOs have communicated apprehension to participation in AcqDemo based 

on sunset dates in the past, but they are ready to join should it become permanent. Permanence would 

likely increase participation. Currently, Congress caps employee participation in the project at 

130,000 employees; however, 147,000 civilian AWF employees would be eligible to participate should 

AcqDemo become permanent. The scope of supporting staff that could transition into the program 

varies. Eliminating the AcqDemo participation cap would have no effect on the participant eligibility 

criteria.

Allow AcqDemo Hiring Authority Policy to Continue Concurrent with Implementation of Section 809 

Panel Hiring Authority Policy

The AcqDemo Program Management Office efforts to improve DoD’s ability to compete with the 

private sector for talent are commendable; however, the master list of primary hiring authorities set 

forth in the Section 809 Panel Recommendation 25, Streamline and adapt hiring authorities to support the 

acquisition workforce, goes a step beyond the capabilities currently available under AcqDemo. The 

master list will better afford DoD speed and flexibility required to address the evolving needs of the 

AWF. Because AcqDemo’s new hiring authority policy has not had sufficient time to be tested, those 

authorities should be maintained and used concurrently during the transition to the Section 809 Panel’s 

recommended hiring authorities for the broader AWF. In the future, Congress and DoD should assess 

the existing AcqDemo hiring authorities to determine whether they should continue to exist, or 

whether they are redundant in light of the hiring authorities currently available to the entire AWF.

Improve Transparency

The AcqDemo Program Office has taken steps to ensure AcqDemo is fair and transparent, yet mistrust 

from labor unions and a perceived lack of transparency related to the link between contribution scores 

and compensation still exists. This situation is generally limited to certain organizations that have less 

transparency. If the AcqDemo Program Office is not already doing so, it should consider implementing 

measures in the new AWF personnel system similar to the following:
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§ Establish a minimum criterion, consistent with the Privacy Act of 1974 and 5 U.S.C. § 552a 

Records Maintained on Individuals, that participating organizations post on an organizational 

website regarding the process by which ratings are calculated and how their employees 

compare with their peers in other organizations. 

§ Require participating organizations to allow labor unions to provide input into the 

development of business rules and to attend pay pool meetings.

§ Develop a process that will allow labor unions to appeal to the AcqDemo Program Office when 

a participating organization is less than transparent with the union.

§ Provide annual, or more frequent, AcqDemo training for the participating organizations.

§ Perform an annual or more frequent, assessment of participating organizations business rules 

and pay pool process and post assessment outcomes on the AcqDemo home page.

§ Regularly post on the AcqDemo home page data that explain when and how either the 

AcqDemo Program Office or participating organizations use AcqDemo professional 

development, sabbaticals, and the voluntary emeritus program opportunities.

Implementation

Legislative Branch

§ Repeal 10 U.S.C. § 1762, Demonstration Project Relating to Certain Acquisition Personnel 

Management Policies and Procedures.

§ Replace 10 U.S.C. § 1762 with 10 U.S.C. § 1763 Personnel System for the Acquisition Workforce.

- Make the personnel system established pursuant to 10 U.S.C. § 1763 the sole, mandatory 

personnel system for the DoD AWF.

o Do not include an expiration date.

o Do not include a limitation on the number of AWF participants.

- Allow a 5-year phase-in period from the effective date of enactment of the new AWF 

personnel system, to transition all DoD AWF employees into the new system. 

o Allow collective bargaining agreements between labor unions and participating 

organizations that are in place prior to the effective date to continue for the duration of 

their existence without options to extend.

o Limit new collective bargaining agreements entered into between labor unions and 

participating organizations after the date of enactment to participation under the new 

AWF personnel system.

Executive Branch

§ There are no Executive Branch changes required for this recommendation.
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Implications for Other Agencies

§ There are no cross-agency implications for this recommendation.